SBA loans aren’t being crunched at area banks

Bob and Martha Beck own a good bit of rental property around Nashville and want to refinance the few properties they didn’t own outright.

Interest rates dropped and their “S” corporation jumped on the opportunity to refinance at a lower rate with a shorter term to meet their goal of paying off the properties.

“This is the time to borrow money because interest rates are so low,” said Bob Beck, 73. “First Tennessee wanted our business and we gave it to them.”

Small businesses continue to borrow money and banks continue to lend to them, seemingly contrary to the broader belief that banks aren’t lending much.

“We haven’t seen much of a reduction in our loan production at all,” said Jim Schmitz, Nashville president for Regions Bank, adding that the pipeline is good.

Tony Thompson, First Tennessee’s Nashville regional president said the bank’s small business portfolio has been growing.

“We’re just not seeing the stress that is being portrayed,” he said.

With the credit crunch, loans backed by the U.S. Small Business Administration would seem to be the route small businesses would take more often. But that hasn’t been the case in Tennessee.

“Our business is about the same as it was at this time last year,” said Clint Smith, SBA’s district director here.

Smith said a recent national SBA survey of lenders showed that most were actively looking.

In Tennessee, from Oct. 1 through April 4, Smith said there were 564 SBA loans with a total loan value of $103.9 million. During the same period last year, more loans were done, 576, but at $75 million in value.

Smith said demand for the loans appeared down, noting that small business owners were reluctant to expand because of anxiety over the economy. The increase in value this year could be more banks shifting more loans to SBA guarantees to lower risk, he added.

First Tennessee’s Thompson said his bank uses a third party to do SBA lending but doesn’t “offload” the risk.

“Our small business origination is up” two fold better than February, Thompson said. He wouldn’t give specific numbers but said, “Those originations are in the seven figures.”

When businesses can’t get bank loans, they can turn to nonprofit Southeast Community Capital, which manages various enterprises funds.

Hank Helton, Southeast’s senior vice president, said his firm hasn’t seen an increase in demand from businesses that can’t get funds from traditional sources. He said the firm has seen an increased demand but couldn’t attribute to banks tightening lending.

“There seems to be a growing list of entrepreneurs out there starting up businesses,” Helton said.